Volkswagen, Lawyers Reach Sweeping Agreement In Emissions-Cheat Case

SAN FRANCISCO – U.S. District Judge Charles Breyer said Volkswagen AG has reached an agreement in principle with U.S. government officials and plaintiffs’ lawyers that, if approved by the court, would give owners of nearly half a million vehicles affected by the German automaker’s diesel-emissions cheat the option of having their vehicles repaired or selling them back to Volkswagen.

The deal also addresses, to an extent, remediation for environmental damages caused by the emissions cheat, which allowed about 480,000 VW vehicles in the U.S. to operate without pollution controls.

Although many details of the compensation deal have yet to be worked out, the agreement would require VW to pay “substantial compensation” to owners of 2-liter-engine diesel vehicles who opt for VW to buy back their vehicles. Drivers who lease VW vehicles affected by the emissions cheat will be allowed to cancel the lease. The deal does not yet address how VW will handle about 90,000 three-liter Audi and Porsche vehicles.

The deal, which Volkswagen reached with the U.S. Environmental Protection Agency (EPA), California Air Resources Board, California Attorney General, and plaintiffs’ lawyers, would also establish a fund to study and help offset the environmental damage caused by all the dirty emissions.

Car owners may opt to have their vehicles repaired instead, but the details of those arrangements are still being negotiated.

Federal Trade Commission officials present at the hearing in a San Francisco federal court reportedly were satisfied with the framework of the agreement. The FTC filed a consumer-fraud complaint against VW last month, alleging the company marketed its vehicles as low-emission, environmentally friendly, and able to maintain a high resale value. The full commission will decide later whether the agreement announced Thursday resolves its complaint.

The full details of the agreement will be made publicly available on June 21, the date Judge Breyer set as a deadline for lawyers to file a formal motion seeking preliminary approval of the deal. The Judge said he would rule by late July whether to give the deal his preliminary approval.

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